Content about Economics

CHICAGO — MID-MARCH FOUND THE STOCK MARKET posting its best day of the year, with the Dow Jones closing at its highest level since 2007 and the Nasdaq composite closing above 3,000 for the first time since December 2000.

While the unemployment rate held steady at 8.3%—a three-year low—the number of private-sector jobs continued to increase. With a jump of 233,000 jobs in February, more than 3.9 million jobs have been added to the U.S. workforce.

“We’ve had 24 straight months of private-sector job growth,” says Secretary of Labor Hilda Solis. “U.S. job growth over the last six months has been the strongest since before the recession began in 2006.” Experts say, however, that it will take another five years to gain pre-recession employment figures.

MORTGAGE APPLICATIONS WERE DOWN for the week ending March 2, decreasing 1.2% from the previous week, according to the Mortgage Bankers Association. Along with that news, RealtyTrac showed new foreclosures were up 2.89% from December 2011 to January 2012.

CHICAGO — Helping to ring in a better new year are the Federal Reserve Board, the nation’s unemployment numbers and job growth, mortgage applications, and pending home sales.

ALL BUT ONE OF THE FEDERAL RESERVE DISTRICTS reported an increase in economic activity in a report filed Nov. 30. The districts saw a slow to moderate upward trend in consumer spending, with the strongest upticks occurring in vehicle sales and tourism dollars. Manufacturing activity and overall bank lending also increased slightly.

THE NOVEMBER JOBLESS RATE was down to 8.6%, according to the U.S. Department of Labor, with an estimated 120,000 jobs added—that’s the fifth month in a row to post 100,000 or more new jobs, a first since April 2006. However, a downswing in wages slightly offset that good news.

The department reports a decrease in the weekly seasonally adjusted unemployment claims in the week ending Dec. 3, as the number went to 381,000 from the previous week’s revised number of 404,000.

CHICAGO — A new report from NYSE Euronext provides some economic encouragement. Top executives for 62% of public companies and 71% of private firms expect to expand their businesses and add jobs in 2012, a move counter to growing uncertainty of the economy and political instability. This is the first report from NYSE Euronext to include private or emerging companies and MBA students that the NYSE dubs “aspiring corporate leaders.”

On the other end of the spectrum, the congressional so-called Super Committee failed to come to an agreement on a deficit reduction plan, leading to a drop on the stock market and continued debate as to the cause of the committee’s inaction. The main stumbling block appeared to be the continued tax cuts, rather than higher tax rates, for the upper tier of income earners.

ARDMORE, Pa. — Thanks to the 100% “bonus” depreciation write-offs created by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, many dry cleaning businesses are discovering that capital investments in equipment, machinery and other business assets are more affordable today than ever before. Remember, however, the 100% bonus depreciation write-off is available only for qualifying purchases made by dry cleaning plants and businesses in 2011.

Those dry cleaners that have hesitated or postponed making capital investments because of the recent economic downturn might now want to consider how the combined use of incentives and the 100% bonus depreciation can substantially reduce the cost of capital investments. Even funding those new-equipment purchases is easier—at least for a while.

CHICAGO — Inflation affects us all. Even when it is coasting along at what might seem to be a harmless rate, it eats away at the buying power of the dollar.

When inflation hits 11% as it did in 1979, and then rises to 13.5% as it did in 1980, the world of investing, saving and spending is turned upside-down. That’s why some financial professionals are concerned about the most recent trend. After finishing 2010 at an average rate of 1.6%, the first five months of this year show an average of 2.64%, with the latest month in that period hitting the 3.6% mark.

Could this be the portent of sky-high inflation such as we saw in the 1970s? There is a growing amount of evidence that would suggest that possibility. The chief villain, according to many economists, is the Federal Reserve’s easy-money policy designed to support the government’s $2.2 trillion in stimulus spending. That, in addition to the rise in other government spending, has skyrocketed our federal debt.

WASHINGTON — A proposal from the Federal Reserve could limit debit interchange fees—charges associated with accepting debit-card payments—to 12 cents per transaction. If enacted, the proposal stands to benefit small businesses.

The average interchange fee for debit transactions in 2009 was 44 cents per transaction, according to Fed research. “Setting a cap ensures that no issuer is able to receive an interchange fee at an unreasonably high level,” the proposal says.

SAN JOSE, Calif. — In spite of the recession, a new report from Global Industry Analysts Inc. says, the U.S. market for drycleaning plants and coin-operated laundries will recover and gain momentum in the next few years, reaching $3.5 billion by 2015.

WASHINGTON, D.C. — Senators Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine) introduced legislation last week to combat the evasion of federal import duties by certain importers and foreign suppliers. If passed, the act will help prevent foreign suppliers of wire hangers and additional products from importing their wares without paying duties mandated by law.

The House passed a bill Wednesday that provides $19.3 billion in tax incentives to help small businesses obtain capital, while eliminating capital gains on the sale of some small-business stock.

H.R. 4849, the Small Business and Infrastructure Tax Act, allows a 100% capital gains tax exemption from the sale of qualified small-business stock bought before 2012.

The measure also increases the tax deduction for business start-ups from $5,000 to $20,000, and extends the Build America Bonds program through June 2013.

Richard Ehrenreich, president of Olney, Md.-based Ehrenreich & Associates, continues explaining how he evaluates drycleaning operations and places value on them, in his own words (Editor’s note: read Part 1 of this story here.). Ehrenreich has so far assessed the bussiness' strengths and weaknesses and suggested ways to improve cashflow in advance of a possible sale.

CHICAGO — Last month, Federal Reserve chairman Ben Bernanke announced that the economy had resumed slow growth, meaning that the recession has come to an end. “Main Street,” however, disagrees: Asked, “Based on your experience, do you believe that the recession has come to an end?” an overwhelming 86.5% of drycleaners answered “No,” according to the most recent Wire survey. Just 7.7% said that the economy is improving, and 5.8% answered “Don’t know.”